Understanding Buy-Sell and Key Person Insurance

Most business owners have term life insurance that provides protection in the event of a fatality, but what about protection for a disabling injury?

That weak point is an opportunity to discuss your business owner clients’ plans for the future. Every business owner’s goals are different, but one shared goal is growing and protecting the business. That’s why one of the most productive conversations to have with a business owner is about executive benefits such as buy-sell or key person insurance.

Buy-sell is a type of disability insurance that’s tied specifically to the value of ownership shares. The policy pays a lump sum or monthly payments to keep the company solvent during a buyout or transfer of ownership. Typically, there is a 365-day or 730-day waiting period for this kind of coverage.

Key person disability insurance can protect both owners and key non-owner employees in the event of a disability that makes them unable to perform their regular job duties. After a 180-day or 365-day waiting period, the policy pays a lump sum that can be used at the owner’s discretion; for example, to hire a replacement or cover expenses related to the disability.

Among the many important value adds we provide is an independent valuation of a business to start the conversation about this critical insurance. For more information, see the printable PDFs below, contact us or give us a call at (203) 226-4077 to set up a consultation with a protection specialist.